Case Study #1
Boosting operational, financial and management capabilities for an Advertising & PR Client
- Establish a timekeeping system that will enable management to evaluate productivity.
- Institute a more formal process for determining the scope of work for each retainer and project client. This requires an agency to adopt a formal hourly cost per employee that is to be calculated. Institute the use of staffing, time frame and cost estimates as a formal part of every account.
- When combined with a timekeeping regimen, this process will enable Management to determine profitability and productivity for all employees on every account.
- Institute the regular analysis of productivity by determining Utilization (the percent of an employee’s total available time that is assigned to a client), and Realization (the amount of the employee’s time which has been posted to a client and is actually billed and collected).
- Modify the Chart of Accounts to present financial statements that provide more management information.
- Modify commission structure to place more responsibility and accountability on the salespeople.
- Eliminate double commissions on every client and project
- Reduce base salaries. This could be done gradually over months, by advancing unearned commissions to keep the total base comp at the present level in month 1; then reducing the advance over months 2 & 3 until the salesperson is guaranteed only the base salary by month 4.
- Consider setting a minimum agency profit margin that must be achieved before any bonuses or performance commissions are paid.
- Consider making the sales commission apply only to the initial sale, not the yearly renewal.
Account Acquisition & Management
- Identify client and industry categories in which Management wishes to work, and shape the staffing profile to conform with the selected direction that Management has chosen.
- Institute the provision for scope creep in all client contracts and project agreements in order to enable the agency to charge additional fees when clients expand the scope of an assignment.